Uganda’s Financial Markets Index Sees Decline, AFMI Report Reveals

0
232
Uganda Stock Exchange
- Advertisement -

The latest Absa Africa Financial Markets Index (AFMI) report reveals a decline in Uganda’s score to 62.8 in 2023 from 64.4 in 2022. Despite this, the country maintains its 4th position in the index within the continental bloc.

AFMI, now in its seventh year, assesses countries’ financial development based on market accessibility, openness, and transparency, aiming to identify ways to reduce investment barriers and foster sustainable growth.

Measured by six pillars including market depth, access to foreign exchange, market transparency, tax and regulatory environment, capacity of local investors, macroeconomic environment, and transparency plus legal standards and enforceability, AFMI provides insights into financial market performance.



Presenting the report, Absa Bank Uganda’s executive director, David Wandera, highlighted Uganda’s decline in access to foreign exchange, attributed to reduced interbank foreign exchange turnover and international reserves adequacy.

- Advertisement -

However, Uganda saw improvement in the macroeconomic environment and transparency pillar, maintaining its second position. This was driven by a slight decrease in external debt to 26.8% of GDP in 2022.

Uganda’s policy transparency, macroeconomic data standards, and relatively low inflation rate contribute to its positive performance. Additionally, progress in Pillar 6, unchanged at 85%, underscores Uganda’s commitment to financial market development, exemplified by the adoption of netting legislation.

Yet, challenges persist, particularly in Pillar 4 regarding the capacity of local investors. Uganda’s score dropped to 14, reflecting a decrease in pension fund assets per capita. Additionally, limited liquidity in domestic markets poses obstacles to market depth and overall financial market performance.



Efforts to improve include enhancing liquidity in domestic markets and developing frameworks for initiatives like green bond issuance. Addressing these challenges is crucial for Uganda to strengthen its financial markets and achieve sustainable economic growth.



- Advertisement -
0 0 votes
Article Rating
Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments